Virgin Money: overview of products across three markets

Virgin Money branded organizations currently function in Australia, South Africa and the United Kingdom

virgin money

Virgin Money: overview of products across three markets. Source: facebook.com

This year, the British banking giant has faced severe losses. In April, the famous UK Virgin Money lender announced that its underlying pre-tax profits for the six months to March 31, went down 58% on the £286 million reported a year earlier, falling to the low £120 million mark. Sadly, the company has shifted its financial position from profits of £42 million a year ago to a £7 million interim loss due to the global Coronavirus outbreak. The management was forced to cut around 500 jobs and shut or merge over 50 branches across the UK.

Moreover, this May, Virgin Money suspended over 30,000 customers’ credit cards without warning. Customers were told by email that their accounts were blocked with immediate effect and that they would not be able to make further purchases. The timing of so-called routine “affordability checks carried out by a responsible lender”, could not have been worse to the account holders struggling to keep head above water during the national lockdown.

Many media representatives labeled this move as “shameful”. Therefore, a few days later, Virgin Money said it decided to unblock purchases for all credit cards affected, with the previous credit limits preserved.

SEE ALSO: Virgin Group founder Richard Branson and his secrets for success

What do we know about Virgin Money?

This financial services brand was founded by Richard Branson in the 1990s. The recognized subsidiary was a part of the British multinational venture capital conglomerate. The Virgin holding is represented by a wide range of companies starting from the Virgin record label to Virgin Atlantic airline. Virgin Group is also an active technology-focused venture investor with a portfolio of over 35 companies spanning the consumer internet, fintech and sharing economy sectors.

Getting a banking license, Virgin Money initially operated in the UK, but later spread its services worldwide. Virgin Money branded organizations currently function in Australia, South Africa and the United Kingdom. The former US services have been withdrawn entirely from the market.

Each Virgin Money branded license holder acts independently from the others, thus the offered financial products vary from country to country.

In general, this financial services provider deals with lending in all its aspects: starting from small personal loans to mortgages. It also offers a number of saving options for customers as well as current bank accounts.

virgin money

What do we know about Virgin Money? Source: flickr.com

In 2018, The owner of Clydesdale Bank and Yorkshire Bank, CYBG, agreed with Sir Richard Branson’s Virgin Group to license the Virgin Money brand for £12m a year, rising to £15m later.

However, in June 2019, CYBG announced its plans to consolidate its businesses under the Virgin Money brand. Clydesdale and Yorkshire Banks, as well as app-based bank B, will all be rebranded as Virgin Money by the end of 2021. In October 2019, CYBG PLC changed its name to Virgin Money UK PLC. All customers of Clydesdale Bank, Yorkshire Bank, B and Virgin Money brands are now served from a single authorized and regulated banking entity.

It is clear to us that the combined group can transform the UK banking landscape and offer real benefits to customers and communities throughout the UK
Jim Pettigrew, the CYBG chairman

Initially, Branson remained the major shareholder of Virgin Money owning 35% of corporate shares. After the acquisition, his stake in the merged company fell to 13.1%.

Products and services

As we’ve already mentioned, different regional institutions working under the Virgin Money umbrella brand offer different services.

Virgin Money, UK, is a leading national challenger bank, providing residential mortgages, savings and credit cards along with a range of complementary financial products including investments and insurance.

Whilst Virgin Money, Australia, is proudly part of the Virgin brand and family, Virgin Money’s business here is 100% owned by the Bank of Queensland (BOQ) Group, one of Australia’s leading regional banks. It offers home loans, credit cards, insurance and superannuation accounts.

Virgin Money, South Africa, currently offers credit cards and the payment app Virgin Money Spot.

Virgin Money credit cards

virgin money

Virgin Money credit cards. Source: flickr.com

There are a few types of Virgin Money credit cards available to British citizens.

  • Balance transfer credit cards. A balance transfer allows you to move high-interest debt onto a credit card with a lower rate. Virgin Money has an introductory 0% APR period that can last for more than 2 years (there are a few different options available). After 25 months maximum, the interest rate rises to over 20%. This card type also initially charges a fee of 1.5% of the amount transferred, growing to 5% after a few months of use. Money transfers may be free for the whole year and there’s no annual account fee. The interest-free period on purchases is up to 50 days. These offers are also combined with the money transfer credit card type meaning that you can transfer money from a low-rate credit card into your current account, for instance, to pay off an expensive overdraft or to withdraw cash.
  • All-round credit cards. These cards are suitable for multiple financial purposes. They have a no-interest introductory term from 15 to 18 months, 0% on purchases and money transfers for over a year, as well as zero annual/monthly fees. After the indicated period transfer fees rise to 3-4%, while the average representative APR is about 22%.
  • Virgin Atlantic credit cards. These credit cards are suitable for those customers who fly regularly and want to build up air miles through daily spending. The collected air miles can then be converted to flights or upgrades. Like most miles schemes, Virgin Atlantic offers have many different ways of earning and spending. For example, you can earn 5,000 bonus miles with your first card purchase made within 90 days of account opening (15,000 for the Reward Plus card that costs £160 annually). Earn 0.75-1.5 Flying Club miles for every £1 spend depending on the card type. Spend £20K a year on your card and choose an extra benefit – an upgrade to premium, or a Companion ticket (£10K with the Reward Plus card). Double miles when you spend directly with Virgin Atlantic and Virgin Holidays through the contact centre and online.

Using those credit cards has another benefit. Customers can earn cashback when they shop online with over 500 top brands under the Virgin Money Back program.

In Australia, there are two types of Virgin Money credit cards:

  • No annual fee card. In addition to zero annual fee, it has two types of introductory special offers depending on your needs.
    – 0% p.a. for 12 months on balance transfers
    – 0% p.a. for 9 months on purchases and balance transfer.
    Both offers revert to the cash advance rate. No interest free days apply while you have a balance transfer.
  • Low rate credit card. This card has 0% p.a. for 18 months on balance transfers (2% BT fee applies) and low ongoing variable purchase rate of 11.99% p.a.

In South Africa, the only Virgin Money Credit Card offered has such benefits and features:

  • No annual card fees
  • No monthly service fees
  • Competitive interest rates
  • Simple fee structure
  • Basic Travel Insurance with the option of Additional Top Up Cover
  • Up to 55 days interest-free on swipe transactions
  • The credit card can be delivered to your doorstep, by courier, free of charge
  • Lost Card insurance
  • Personalized credit card design
  • Up to three additional cards linked to your main account
  • Car Card option as a value add
  • A personalized limit based on your credit score
  • Exclusive access to Virgin Money Rewards
  • 3D Secure protection for online shopping

Digital Current Account

bank branches

Haymarket Lounge. Source: thefinancialbrand.com

In late 2019, Virgin Money in the UK announced the launch of their first digital current account. It can be opened in-app, online, over the phone or in one of the bank’s 231 branches.

The overdraft rate is currently set at almost 20%, while the account itself pays 2.02% AER on balances up to £1,000, whereas interest is paid monthly. No additional fees apply for shopping abroad or account maintenance.

Moreover, the offer comes with a linked easy-access savings account which pays 1% with no restrictions on bonus rates or withdrawals. However, the interest rate will go down to 0.50% AER from 1 July 2020.

Virgin Money apps

In the UK, where Virgin Money is technically a challenger bank now, the app has typical budgeting features including transaction tracking, categorization of spending, and savings goals. However, some unique features are also present. For instance, ‘sweep’ feature transfers money over from your savings if your current account balance is running low. Customers can also make an electronic cheque payment using their smartphone camera.

Virgin Money Spot (South Africa) is a fee-free mobile payments app. Once you have downloaded and registered on Virgin Money Spot, you can link your bank card to make P2P payments and shop at participating stores. Up to 5% of your purchases are returned as cashback at the leading national retailers.

Paying gets easier with scanning a QR code at the store counter or the one printed on your receipt. Group pay option in the Spot money transfer app enables splitting costs between friends, family and teammates by sending a text.

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